Rupee hits record low; stocks edge higher

Wednesday, 24 October 2018 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee hit an all-time low for a third straight session on Tuesday as banks and importers purchased the US dollar despite the Central Bank’s intervention to prevent the fall, while stocks edged higher.

The rupee dropped to an all-time low of 173.00 per dollar, surpassing its previous low of 172.50 hit on Monday, mainly due to importer demand for the greenback, market sources said.

The rupee ended at 172.60/70 per dollar, compared with its previous close of 172.40/60. The Central Bank intervened to prevent further fall after it hit 173.00, market sources said. Central bank officials were not immediately available for comment.

The Central Bank surprised financial markets on 2 October by leaving its key policy rates unchanged despite heavy pressure on the rupee and foreign outflows from government securities.

The rupee has weakened 2% so far this month after a 4.7% drop in September against the dollar. It dropped 12.4% so far this year. The Colombo stock index ended 0.08% firmer at 5,770.52, further moving away from its lowest close since 28 November, 2013 hit on Friday. It shed 3.6% last month, and lost 9.4% so far this year.

Data from the Central Bank showed foreign investors sold government securities worth a net Rs. 5.3 billion ($ 30.7 million) in the week ended 17 October. Sri Lanka has seen a net outflow of Rs. 85.9 billion in securities so far this year.

Stock market turnover was Rs. 201 million ($ 1.17 million) yesterday, nearly a quarter of this year’s daily average of Rs. 761.1 million.

Foreign investors were net sellers of shares worth Rs. 59.3 million yesterday, extending the year-to-date net foreign outflow to Rs. 9.1 billion worth of equities.